Does this New Federal Bill Promote Pyramid Schemes? deconstructs how this proposed legislation really protects the industry.

| Bonnie Patten

The Congressional Committee on Energy and Commerce is reviewing a bill concerning pyramid schemes (H.R. 5230) that was introduced in the House of Representatives last week. Proponents of the bill claim that it will provide greater clarity to consumers and direct selling companies as to what is and what is not a pyramid scheme. But I simply don’t think that’s the case. First, when it comes to protecting consumers from pyramid schemes, the bill appears to do more harm than good. Second, a lot of ambiguous terms are used in this bill. For example, what does “original net cost” mean, or “marketable inventory,” and who gets to determine things like “appropriate set-offs” and what makes a set-off “appropriate”?

After hours of analysis and consultation with world-renowned pyramid scheme experts, was able to shave down the layers of legalese and obfuscation contained in this bill and whittle it down to its essence. Below is our best take on what the drafters of this bill were really trying to say. Check back for further updates.

H.B.5230: The Pro-Pyramid Scheme Bill

Bonnie Patten

Bonnie, executive director of, is an attorney and mother of three. Her commitment to educating the public about deceptive marketing stems from her belief that education is the only…

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